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How Negatives Hold Back Your Score?

Simple Ways to Overcome by Understanding the Process
Recent Negatives ► The Impact
  • New collections & new late payments are like a fender bender
  • They cause a quick score drop, just like a hike in car insurance rates
  • Collections ► Have a 20+ Point per collection negative impact on your credit for 2 years
  • The balance of your collection does not impact your score different, $100 vs $1,000 is the same negative score impact
Recent Negatives ► Your Simple Options
Which 30 Day Late Payments ► Will Drop Your Credit Score?
  • Student Loans
  • Auto Loans
  • Credit Cards
  • Personal Loans
Which 30 Day Late Payments ► Don't Drop Your Credit Score?
  • Rent & Utilities ► Unless you use a reporting service like Rental Kharma or Experian Boost, then late payments are required to be reported
  • Subscription Services Like TV, Internet, Cell Phones, Netflix, Spotify etc
  • Subscription Services will only affect your credit if the account is sent to collections for defaulting on a service contract
30 Day Late Payments ► The Impact
  • Just one 30 day late payment can drop your score 60-110 points
  • The higher your score the bigger the penalty
  • 30 Day late payments impact your score for 2 years
  • If the late payment was not Covid related, the 2 year penalty will apply
New Accounts ► The Problem
  • The credit score math formula treats new accounts like teenage drivers
  • The system drops your score to make sure you don't have any accidents
  • After 3-6 months of good payment history, your score will start to improve
  • If you open many new accounts in a short period of time, the system looks at this like your first car was a corvette and penalizes you more
New Accounts ► The Solution
  • Do not keep applying for new credit after you get your first approval
  • If you did get approved for more than one new account recently, you likely saw your score drop. Tip ► You can close the extra new accounts and your score will rebound fast
  • Stick to a plan of adding only 1-2 new accounts per year to your credit, until you have 4-7 total open accounts
  • Pay on your credit card bills 2 times a month to ensure that your reported balance does not spike your card usage
Maxing out a credit card ► The Impact
  • Score will drop 30-90 Points
  • The higher your score the bigger the impact
  • Maxing a card is a big credit score penalty!
Maxing out a credit card ► The Fix
  • This can be a very short term problem if you can quickly pay down the card to 80% of available credit
  • If you can use a balance transfer, this is the time to make sure no card has close to a max usage
I have ► Too many hard inquiries, 3 or more
  • This is often caused when shopping for a car, car dealers don't let you know that they are shopping your auto loan with 5-15 lenders and you end up with 5-15 inquiries in a very short period of time
  • Your score can fall hard real fast ► Each hard inquiry can drop your credit score by 5 points. 10 inquiries = 50 points
Remove ► Unauthorized hard inquiries
  • The auto lenders that pulled your credit likely never got your permission to pull your credit with 3rd party lenders
  • The car dealer also did not make you aware of this credit score impact
  • This video helps you clean up this problem
My credit card usage ► Is too high
  • High credit card usage is a red flag for credit scores and can cause a huge drop in your credit score
  • Paying down high interest credit cards can take a lot of time if the overall balance is too high
Medical Debt Collections ► What Just Happened?
  • The system is broken, you are not alone! 60 Million Americans have medical debt in collections affecting their credit scores.
  • "Surprise Medical Bills" from out of network providers that Insurance companies refuse to pay is the problem
  • The amount of the medical collections bill does not affect your credit score differently, your score drops just like any other collections 20-25 points
Help is here ► US Gov Ends Surprise Medical Bills
I think I need ► Debt Settlement
  • Hiring a debt settlement company can cause a huge score drop
  • 45-125 points down, the better your score the larger the penalty
Debt Settlement ► Options without a huge score drop
  • Add Rent & Utilities to your credit with a goal of getting a 680 score
  • Research lower interest personal loan options on Credit Karma to pay down your high interest cards
  • Paying down high balance credit cards will also increase your score which means you can refinance your personal loan quickly at an even lower rate, sometimes at low as 5-9%
I Just filed ► Chapter 7 Bankruptcy
  • Your score can drop 130-240 points when filed
  • Chapter 7 is the easiest form of Bankruptcy to heal from fast
Building Good Credit ► After Chapter 7 Bankruptcy
  • Chapter 7 wipes out old negatives, you now need positive open accounts
  • Adding rent & utilities to credit scores post bankruptcy can help you recover quickly
  • Member reviews post Bankruptcy